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When a hawaii creditor threatens to garnish wages, that means that creditor is going to seek an order under which part of the debtor’s wages or salary will be sent to the creditor, to satisfy a debt. Creditors may not (other than tax authorities, like the IRS) do this at will; instead, they first need to sue the debtor and win, to establish a legal right to the money. Once they have done that, though, they can use garnishment to seek satisfaction of any debt, including debts resulting from any lawsuit, such as professional malpractice, auto accident, defamation, or breach of contract. The most common use of garnishment, however, is for consumer debts (including credit cards), domestic debts or obligations (such as alimony or child support), and tax debts. Also, any income (not just wages or salary) and any money owned by or owed to a debtor which is in the possession of a third party can be garnished—though wage garnishment is possibly the most common, and certainly the best known, type.

Hawaii Garnishment Exemptions and Non-Exemptions

Federal law protects Social Security from garnishment except for debts relating to child support and alimony, or certain debts to the federal government, such as taxes.

Furthermore, Hawaii has carved out other exemptions from garnishment for a few types or categories of for non-wage, non-salary sources of income:

Pensions: like most states, Hawaii protects the pensions of public or state workers, including police and firefighters.

In addition to Social Security, several other forms of public benefits or assistance are protected, in whole or in part, such as: workers’ compensation; unemployment benefits; unemployment work relief funds, and public assistance for certain work done the home or a workshop.

Some insurance benefits, such as disability benefits; annuity contracts if the beneficiary is the insured’s spouse, child, or parent; group life insurance; life insurance if the policy prohibits using the proceeds for creditors; and life or health insurance policies for the debtor’s spouse or child.

Hawaii Maximum Threshold

Hawaii follows a more complex scheme than other states for determining how much of a debtor’s income could be garnished. It gives debtors a choice—use either the federal exemptions or the Hawaii exemptions, whichever is better.

Under federal law, the lesser of the following may be garnished:

25% of disposable income (total of all garnishment, not per claim or creditor)

The amount by which a debtor’s weekly income exceeds 30 times the minimum wage

Under Hawaii law, only 5% of the first $100 of monthly disposable income may be garnished; 10% of the second $100 per month; and 20% of anything over $200 per month.

Before turning to the definition of “disposable income”—for anyone making much more than 30 times minimum wage per week (currently $7.75 per hour, so $232.50 per week), the Hawaii exemptions are better, since they cap garnishment at 20% of income, not 25% as the federal rules do. However, for people earning up to $232.50 a week, or around $950 per month, the federal rules are better, since their income would be fully protected from garnishment, whereas under Hawaii’s rules, part of it could be garnished.

What does “disposable income” mean, though? For garnishment purposes, it does not mean its common, everyday usage of income remaining after all necessary expenses, including food, medical care or insurance, transportation, and housing. In that common usage, disposable income is essentially synonymous with the money a person has left for savings, investment, or recreation. However, for determining how much may be garnished, disposable income is ALL income remaining after legally required deductions from a person’s paycheck. There are not many of these, and FICA is the main one for most people. That means that most of a person’s income will be “disposable income” and available for garnishment.

In addition, certain key or crucial debts—such as for unpaid taxes or child support—can result in higher levels of garnishment than is possible for the majority of consumer, business, or lawsuit-related debts.

Hawaii Statute of Limitations

In determining whether garnishment was brought in a timely fashion—

First determine whether the lawsuit for the underlying debt was brought in time. For common debts, the statutes of limitations, or time to sue, are:

Open accounts (credit cards) and sale of goods: 6 years

All contracts (written or oral/verbal): 6 years

Promissory notes: 6 years

(These periods are slightly longer than many other states’ statutes of limitation.)

Second, determine if after obtaining the judgment, the creditor proceeded to enforce it in time. In Hawaii, the creditor generally has 10 years to act. That means a creditor can afford to wait a decade, such as until a currently unemployed or underemployed debtor gets back on his or her feet, before looking to garnish wages.

Writ of Garnishment in Hawaii

To get a writ or order for garnishment, a creditor first needs a judgment. That—when the creditor sued, looking to obtain a judgment—is when the debtor had its chance to meet the creditor in court and dispute the debt. After that, garnishment proceeds with little direct involvement by the debtor, since the creditor is seeking an order against a “garnishee”—someone who has the debtor’s money, such as the debtor’s employer, which owes the debtor wages for work done or services rendered.

The creditor, armed with its favorable judgment, applies to the court for garnishment, stating the following:

The debtor owes it money, per the judgment

The debtor hasn’t paid, so garnishment is necessary

The garnishee has money belonging or owed to debtor, which can be used to satisfy the debt

The court will serve paperwork on the garnishee, ordering it to turn over part of the debtor’s wages, salary, or other income to the creditor. The garnishee can challenge the “facts” of the garnishment—such as what it pays or owes the creditor, or even whether the creditor works for the garnishee—but cannot challenge the basic right to garnishment to enforce a judgment. More on Stopping Wage Garnishment in Hawaii.

Getting Legal Help

If someone is faced with garnishment, if they are determined to fight it, they should seek legal help immediately. While often difficult, there are ways to dispute garnishment.

One technique it to attack the validity of the judgment on which garnishment is based. Unfortunately, if the judgment was fully litigated previously, there is usually little that can be done at this stage to challenge whether or not the debtor owes the creditor money. It may be possible, however, to attack the judgment on procedural grounds if it was granted or rendered in error. Examples of procedural defects include when a judgment was rendered by “default,” but the debtor never received proper notice that creditor was suing; or that the lawsuit was too late and the debt too old, based on the statute of limitations. In that regards, since Hawaii’s statutes are slightly longer than many other states, this is less helpful than it might be elsewhere.

Similarly, it may be possible, if the judgment had been rendered many years ago, to show that it is now too late to bring an action, such as garnishment, to enforce it.

Another technique is to reduce what the debtor may have to pay, by showing that the debtor’s disposable income is lower than the creditor and court suppose. The most common way to do this is to show that significant portions of the debtor’s income come from exempt or protected sources, such as certain insurance proceeds, public benefits, or pensions.

It may also be possible to show that a debtor who is already or contemporaneously being garnished for other debts is already having the maximum amount taken out of salary, leaving no “room” for further garnishment.